The Smart Money Is Still With Early Tech Investors

By Jim Kerstetter

March 14, 2016

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In a way, it seems obvious: If you want to make a lot of money investing in a technology start-up, the best way to do it is to get in early and take the big risk. Yet over the last few years, more attention has been paid to companies that make massive investments in companies already well on their way to success. Or at least getting really big.

That may be changing. In a recent report by the research firm CB Insights, so-called early stage investors dominate a list of the top 20 venture capitalists worldwide. About three quarters of the top 20 are investors who put money into start-ups during their early rounds of financing.

The concept of getting in early and taking a big risk with an unknown company was long a staple of Silicon Valley investment. But as today’s hottest start-ups go back and go back again for more funding, it is nontraditional tech investors like mutual funds, sovereign funds and the proverbial rich guy from Russia who have been putting in the big money.